By Craig Erwin, Ph.D.
Cryptocurrency prices tumbled this year. $2 trillion evaporated. The total value of all cryptocurrencies is now less than $1 trillion, about one third of their previous value.
According to Bloomberg, Securities and Exchange Commission (SEC) Chair, Gary Gensler, believes cryptocurrencies should be regulated like stocks and bonds because he thinks cryptocurrencies are securities, not currencies. Gensler believes cryptocurrencies are securities because most people treat them as investments. According to Bloomberg, Gensler believes regulation of crypto is imperative because it would enable the SEC to police undesirable practices such as insider trading.
Will regulation make crypto a smart buy? Just because something is regulated, doesn’t mean it’s a good investment. It just means the government will oversee the industry and exercise control to some extent. You can still lose your shirt. Will some cryptocurrencies end up worthless? Yes, most will. According to CNBC, even people in the cryptocurrency industry say they expect thousands of cryptocurrencies to collapse.
There are wildly different estimates of how many cryptocurrencies there are. Statista said that there were 10,397 cryptocurrencies in February, 2022, but CNBC said that there were over 19,000 on June 3, 2022.
According to Benzinga, there are 7,754 companies on the NYSE and 4,448 companies on the Nasdaq exchange, so there will soon be more cryptocurrencies than stocks traded on the NYSE and Nasdaq. And more cryptocurrencies are created every day.
Most of the companies with stock traded on stock exchanges make money, typically by making and selling a product or service. But no cryptocurrency makes money. Although some buyers and sellers of crypto may make money, cryptocurrency has no intrinsic value and no way to make money. The U.S. dollar has monetary value because it is guaranteed by the U.S. government. Cryptocurrencies have no guarantees.
It probably won’t be long till there are 30,000 cryptocurrencies. Does that mean any of them will be worth something. No. So, don’t waste your money. Go buy ice cream instead.
Do you own any cryptocurrencies? If so, why did you buy them and would you buy them again?
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